Starting and growing a small business is one of the most rewarding things I’ve ever done.
And one of the most challenging.
Like many entrepreneurs, I was laser-focused on launching, marketing, and serving customers.
One of my biggest learnings during this time is more of an administrative matter. That is, you have to get your house in order from the start. Legal protection. Legal protections aren’t something you sort out later. They’re foundational, not optional.
It’s not until you find yourself in trouble or having an issue that the importance of the right contracts and legal documents becomes apparent. It can be the difference between confidently tackling and nervously reacting to every unexpected issue.
Here are six essential legal documents I think every small business should have from the outset.
1. Business Structure Agreements (Partnership or Shareholder Agreement)
If you’re going into business with someone else, a clear agreement is essential.
A shareholder or partnership agreement outlines roles, responsibilities, profit distribution, and exit strategies. It helps avoid messy disputes and keeps the business relationship professional. This really is a foundational document and something many startup founders often overlook.
Lesson learned
Just because you’re friends or family doesn’t mean you won’t disagree. Put it in writing.
2. Terms and Conditions (T&Cs)
Your T&Cs are the rules of engagement between you and your customers. They protect your rights, limit your liability, set out payment terms, and outline how disputes will be handled.
Without them, you’re exposed to misunderstandings and, in the worst-case scenario, even litigation.
What I found
Having well-drafted T&Cs made it easier to say no to unreasonable client demands (all you business owners know what I mean) and focus on delivering value without scope creep.
Protect your value and your time from the start and ensure that your T&Cs are drafted in your favour.
3. Service Agreements or Client Contracts
If you offer services, you need a service agreement.
This spells out deliverables, timelines, payment schedules, and intellectual property ownership. It gives everyone clarity and sets expectations upfront.
Why it matters
I once spent weeks chasing payments on a project with no formal agreement in place. I’ll never put myself in that position again, as now I value my time and my service delivery.
4. Privacy Policy
In today’s digital world, if your business collects any kind of personal information (e.g., via a website), you’re mostly required to have a privacy policy.
This document explains how you collect, use, and store customer data. It’s often mandatory under different jurisdictions’ privacy laws. So check what’s required in your jurisdiction.
Pro tip
Even if you’re just using a simple contact form, a privacy policy shows that you’re professional and builds trust.
5. Employment or Contractor Agreements
Whether you’re hiring staff or outsourcing to contractors, clearly written agreements protect both you and them. They cover roles, expectations, confidentiality, and termination clauses.
Say you bring on a freelancer without a contract and face serious IP confusion later. The freelancer can claim that because they created the work, they own it. You will claim that because you paid for it and instructed it to be delivered, it’s yours.
See how messy this can get without an agreement in place?
A must have
Every working relationship starts with an agreement. No exceptions.
6. Website Terms of Use
If you have a website, you need to govern how people use it.
A website terms of use document limits your liability, protects your content and helps manage user behaviour.
It outlines what users can and can’t do on your site, ownership of the content, and disclaimers around accuracy and liability, among other things.
This is especially important if your site has user-generated content, collects data, or offers online services.
My advice
Don’t copy-paste this from another site. A generic document might not cover your specific needs or reflect your local jurisdiction’s privacy and consumer protection laws.
The early days of running a business can feel like a whirlwind, and legal documents often get pushed aside. But I’ve come to see them as essential tools.
They protect your time, revenue, and reputation, and they help you focus on growing your business with confidence.
Don’t wait for a legal issue to make you take action.
It’s too late then.
Whether you’re just starting out or scaling up, get in touch with an expert small business lawyer to put the right protections in place now. It’s one of the smartest business decisions you’ll ever make.
Key takeaways
- Legal documents lay the foundation for your business
- Privacy, IP, and online presence require protection
- Don’t delay legal setup. It’s riskier later.
Author: Marshall Thurlow is Director and Founder of Orion Marketing Pty Ltd. He is a digital marketer with expertise in SEO, website design, content marketing, and project management.